Traction Podcast
00:19:16 · Roy Luo, Lobo
And I think healthy disagreement's always important, but I think fundamentally great partnerships start with really good alignment on what the goal is, what the opportunity is, and generically, how we're gonna row together to get there. You know, [00:19:32] S2: the word product market fit is a really hard one. Right? We we say it a lot in Silicon Valley, and it's now proliferated across the world. What does that mean to you? Because it means something different to different companies, but there are maybe some fundamentals.
00:19:32 · Lobo, Roy Luo
[00:19:32] S2: the word product market fit is a really hard one. Right? We we say it a lot in Silicon Valley, and it's now proliferated across the world. What does that mean to you? Because it means something different to different companies, but there are maybe some fundamentals. [00:19:48] S1: Yeah. So for us, I think there's a... Again, it's a law of art versus science. But if you talk to enough customers, enough buyers, and you say, hey. This product as it stands today, is this something you wanna buy? Is it strategic to you? Is it important? Is it a point solution, or is it a platform? What's the road map, and are you excited by that road map? Are you too excited by the road map? As in what they are today isn't exactly what you need, but you're excited for what they're building in the future, and that's what you really need. That would... I would call it not product market fit that's too early. But you really wanna hear from the customers. The idea of something is, hey. If they could build... This would be at the top of my budget. This would be the biggest thing that I would fight for money for. I would go to my CFO and ask for a day in and day out kind of thing. And you find consistency in that. Sometimes that's 20 Fortune 500 CIOs or CFOs talking about it. Or if it's SMB software, you just hear it all over the place. Like, how you build conviction in PMF, I would say, can vary in different markets for sure. And that's why I think there are some areas where we've made earlier investments and there are other areas that we've made later investments as well.
00:19:48 · Roy Luo, Lobo
[00:19:48] S1: Yeah. So for us, I think there's a... Again, it's a law of art versus science. But if you talk to enough customers, enough buyers, and you say, hey. This product as it stands today, is this something you wanna buy? Is it strategic to you? Is it important? Is it a point solution, or is it a platform? What's the road map, and are you excited by that road map? Are you too excited by the road map? As in what they are today isn't exactly what you need, but you're excited for what they're building in the future, and that's what you really need. That would... I would call it not product market fit that's too early. But you really wanna hear from the customers. The idea of something is, hey. If they could build... This would be at the top of my budget. This would be the biggest thing that I would fight for money for. I would go to my CFO and ask for a day in and day out kind of thing. And you find consistency in that. Sometimes that's 20 Fortune 500 CIOs or CFOs talking about it. Or if it's SMB software, you just hear it all over the place. Like, how you build conviction in PMF, I would say, can vary in different markets for sure. And that's why I think there are some areas where we've made earlier investments and there are other areas that we've made later investments as well. [00:20:58] S2: Could you share maybe one or two examples of companies, maybe one earlier and one later that you've really loved or, like, you got drawn to the product market fit and what that was?
00:21:08 · Roy Luo
[00:21:08] S1: Sure. Yeah. I would say there are two I could talk a little about. They're both pretty early bets, I would say. Last year, we made an investment in a business called Pepper. They really provide commerce tools for food distribution, actually. And when you talk to food distributors, like, traditionally, it's amazing. We're in 2025 or 2024 at the time. And the way grocers and restaurants order their food, they're still going through catalogs, making phone calls, and texting their sales reps as, Hey, I need chicken. Hey, I need rice. I need... Etcetera, etcetera. And that's how the commerce there is still done today. And what Pepper is providing really is a digital portal for these counterparties to really interact and transact with one another. And so you gotta ask yourself, hey. In order in 2025, how is it still done this way? There are many different end markets and verticals where you'd be surprised how little technology has really penetrated it and has really transformed. And so you talk to the food distributors that were in a world now where we're seeing a paradigm shift. Mobile's everywhere. I think the next generation of labor workers is a lot more tech forward than they used to be, and you can start to get the telemetry points from the market like this is something that is being a pull rather than a push, and you're starting to see that hockey stick moment. Now we'll see if we're right. We'll see if the the business and investment plays out. It's going really so far, but that's the kind of... Those are the kind of data points that we're looking for and the narrative and what we're hearing from the customers and, obviously, how the team at Pepper is really thinking about it, they really align well together, and that's what's exciting. We made a similar type of investment in a business called Primer, which provides infrastructure to manage your entire payment stack for merchants, big, medium, small. And there's a really compelling, I would say, idea and thesis there around how in the future, you have these amazing PSPs out there, but what merchants are gonna really want is intelligent management and... Of the infrastructure for payments. Not every merchant can afford to staff up hundreds of...
00:23:18 · Roy Luo, Lobo
Or hundreds of people, hundreds of engineers to manage multiple PSPs or create decision engines, manage fraud, manage identity, think through chargebacks, all this kind of stuff. And IBRAH provides software to be able to integrate, manage everything, analytics, and orchestrate all of it, basically. And that hasn't really been, I would say, mainstream today with merchants in today's world of commerce. If you talk to a lot of merchants and you walk them through this utopia of the future, they're excited by it. Right? And so you can start to see that the product market fit, the story really resonates with big decision makers. Right? Now you gotta build a product that can actually accomplish all that. There are a lot of different dynamics that I say would enable true success at scale, but you hear enough from these merchants. They're like, that is the future. That is what I want. And the first company that can deliver that to me on a silver platter, I will be so excited to buy that. Those are great data points. Those are great telemetry points. And our job is to get a really good pulse on the market, hear from these folks, these decision makers, and hopefully, we we do it right and we make the right call and make the right investments. [00:24:33] S2: Fantastic. Now you you built this reputation for deep long term partnerships with founders. What are the key elements that contribute to a successful relationship between investors and founders?
00:24:33 · Lobo, Roy Luo
[00:24:33] S2: Fantastic. Now you you built this reputation for deep long term partnerships with founders. What are the key elements that contribute to a successful relationship between investors and founders? [00:24:50] S1: So we talk a lot about alignment. I I really believe that. And I think with alignment, the most important thing is trust and mutual respect. I think firms are important. Brands are important. But what I do appreciate with a lot of different founders is that they really understand that ultimately, we're in a people driven business, and relationships really matter. And so I think a really healthy partnership starts with the acknowledgment that we are on the same team, and we are there to help you accomplish everything when we win together. And not every partnership in our industry always works out, and there's always some drama here and there. And I think that always stems fundamentally from misalignment, and that's why I think that matters so much. But I think with trust, communication, mutual respect, and alignment, that are... Those are the core pillars for any incredibly successful partnership. [00:25:46] S2: Trust is the cornerstone of all relationships, and great companies get relationships, great partnerships are built in an alignment of core values. Do you have a couple of nonnegotiables that you try to align on with founders or in general with any relationship?